MSc Banking and Finance degree

This module will develop your familiarity with the fundamental concepts of financial economics to prepare you for further study in more advanced topics and modules in finance. You will also learn how to model the behaviour of investors under conditions of uncertainty and how to apply theoretical models in both asset pricing and the evaluation of capital market efficiency.

Topics covered may include:

• fundamental mathematical techniques in finance:
  • discounting and compounding in discrete and continuous time
  • calculus and constrained optimisation
• Taylor's series: elementary matrix operations
• yields and the pricing of bonds and discount securities using present value methods
• the term structure of interest rates and the interest rate risk of bond portfolios
• present value models of asset pricing
• the concept of capital market efficiency and tests of efficiency
• the expected utility hypothesis, utility functions and investor choice under uncertainty
• diversification, mathematical optimisation and the mean-variance model
• single index and multi-index models
• the capital asset and arbitrage pricing models: their derivation, interpretation and application
• tests of asset pricing theory and asset pricing anomalies
• hedging, speculation and arbitrage
• an introduction to the basic features of options and futures
• the single-period binomial option pricing model.

This module will provide you with an overview of the financial system, including an appreciation of the economic problems that financial institutions and markets seek to overcome. You develop an understanding of the organisation and operation of the major financial institutions and markets, the impact of technology and regulation on the evolution of the industry and an awareness of how alternative structures of financial systems seek to solve common problems.

Topics studied may include:

• an overview of the financial system
• a short history of money and banking
• banking products and services
• bonds and bond markets
• corporate governance and external finance
• payment systems and the central bank
• equity markets and equity trading
• foreign exchange, commodity and derivative trading
• market infrastructures and international exchance
• money markets, liquidity and the global financial crisis.

This module will develop your competencies in the practical techniques economists often use to handle, analyse and interpret economic data. It will therefore provide you with a solid foundation of the econometric techniques and skills that form the basis for the quantitative/econometric modules of this master's programme.

Topics covered may include:

• an introduction to econometrics
• statistics:
  • regression analysis
  • statistical inference and hypothesis testing
  • dummy variables
  • different functional forms
  • departures from main assumptions (multicollinearity, heteroskedasticity, specification bias and autocorrelation)
• practical labs: applied direct analysis of economic data using STATA (or other equivalent software).

This module will expose you to the microeconomic theory of producer and consumer decision making and will provide a solid grounding in the economic theory and analytical methods employed in subsequent modules.

Topics covered may include:

• consumer choice, including utility maximisation
• theory of the firm, including production functions, and profit and cost minimisation
• general equilibrium and welfare
• Pareto efficiency and the two fundamental theorems.

The aim of this module is to provide you with an understanding of the main models used for macroeconomic policy formulation at the graduate level. You will develop an understanding of important areas of macroeconomic policies, be able to undertake analysis of the policies as regards to financial markets and the economy as a whole and be able to explain the operation of monetary and fiscal policy.

Topics covered may include:

• macroeconomics, finance and measurement: income accounting, flow of funds analysis and the role of money
• the principle of aggregate demand: savings, investment, net exports and the IS curve
• financial markets, aggregate demand and monetary policy
• fiscal policy
• the foreign exchange market, the balance of payments, exchange rate and international policy formulation and co-ordination.

This module will equip you with the quantitative techniques necessary to conduct empirical work in the area of applied finance and economics, and enable you to apply these using appropriate econometric software.

Topics studied may include:

• unit roots
• cointegration
• general autoregressive heteroscedasticity and its applications in finance
• limited dependent variable models
• panel data techniques.

This module will provide an in-depth analysis of the causes, implications and regulatory responses to the recent global banking crisis. In particular, you will review and analyse the theoretical basis of financial innovation and its impact on financial institutions and markets, and the role of derivative instruments in the banking crisis. You will also review and analyse price- and credit-derivative instruments, analyse the nature, causes, policy responses and implications of the global financial crisis and consider post-crisis scenarios for bank business models and regulation.

Topics studied may include:

• financial innovation and instruments
• securitisation
• credit derivatives
• nature of the banking and financial crisis
• causes of the crisis
• policy responses and intervention
• financial regulation.

This module will develop skills allowing you to enhance your oral presentation and communication skills for both academic research and employment. You will develop spoken and written specialist language to suit the high-level communication requirements and style of project proposals and project reports (for both research and employment) and conduct critical constructive synthesis of specialist literature

Topics studied may include:

• literature search using library and online literature databases
• analysis, synthesis and communication of research ideas and findings, using prescribed pedagogic sets of readings
• writing reviews of prescribed pedagogic sets of readings using appropriate specialist language and structure
• preparation of short presentations
• recognition and avoidance of plagiarism and poor scholarship.

This module will introduce you to options, futures, swaps and other derivative instruments and their use in asset management. You will develop knowledge of the basic theory of options and futures pricing and gain an understanding of how different financial instruments can be combined into portfolios for the purpose of hedging, speculation and arbitrage. The module will also enable you to identify the fundamental concepts of derivative financial instruments, derive theoretical prices for options forwards and futures and be able to recognise arbitrage opportunities in simple examples and suggest trade strategies to exploit them.

Topics covered may include:

• the market for options and futures
• the concept of arbitrage
• fundamental option price theorems
• put-call parity
• derivation of the Binomial and Black-Scholes option pricing models
• valuation of futures contracts
• stock index, interest rate and currency futures
• examples of hedging and speculation using options, futures and swaps
• portfolio insurance
• bond portfolio management, duration and convexity.

This module will present modern theories of corporate finance and show how these can be applied to understanding the financing and investment decisions of companies, particularly those quoted on the stock exchange. You will develop an understanding of project investment appraisal, the capital structure of a corporation, dividend policy and current issues in corporate finance.

Topics covered may include:

• corporate investment decisions in the absence of uncertainty
• investment and uncertainty
• the theory of capital structure and Modigliani-Miller
• event studies
• Tobin's Q and investment
• taxation and capital structure
• trade-off and pecking order theories
• empirical evidence on capital structure
• dividend policy.

This module will explore issues related to the mechanics of currency markets, international finance and economics by using economic principles to examine international monetary arrangements and policy since 1945. You will develop an understanding of the international monetary system and the construction of economic modules, along with skills in modelling macroeconomic variables in international finance.

Topics covered may include:

• an introduction to exchange rates
• international parity conditions
• macroeconomic dimensions of international finance
• international monetary arrangements
• determination of exchange rates
• international capital flows: debt, currency crises and credibility.

This module will see you identifing and assessing complex issues in banking and finance, applying tools of analysis to practical and research issues to prepare you for employment in these sectors.

Topics covered may include:

• banking data sources
• statistical methods and techniques to analyse banking data
• banking performance
• competition and concentration in banking industry
• regulation and corporate governance issues in banks and financial intermediaries.

This module will allow you to apply and communicate your knowledge of economics via the development of an individual project essay in banking and finance. You will explore an issue of policy relevant to your research theme, exploiting the economic tools and techniques taught in your master's modules and providing robust recommendations for policy makers and other decision makers.

The module is focused on independent study aimed at identifying, proposing, researching and writing up an individual, distinct and in-depth applied economics research project. Your individual topic will be developed in consultation your academic supervisor and will be closely coordinated with your group project in the Banking and Finance in Practice module.